Tanzania National Debt Overview March 2026 | TICGL Economic Research
📈 TICGL Economic Research — March 2026
Tanzania National Debt Overview: Structure, Trends & Sustainability
A comprehensive analysis of Tanzania's public debt profile as of January 2026 — covering external obligations, domestic securities, creditor categories, and economic implications, based on Bank of Tanzania data.
📅 Published: March 2026📄 Source: Bank of Tanzania (BoT)📋 TICGL Research Division
Total National Debt
USD 51.1B
TZS 132.8 Trillion
External Debt (DOD)
USD 35.8B
70% of total debt
Domestic Debt
TZS 38.6T
30% of total debt
Debt / GDP Ratio
~43%
Below 55% threshold
Section 1
What Is Tanzania's National Debt?
National debt refers to the total amount of money the government owes to domestic and foreign creditors. It is a critical instrument for financing national development — particularly large-scale infrastructure, social services, and economic transformation initiatives. Tanzania's debt portfolio is managed and reported by the Bank of Tanzania (BoT).
Tanzania's national debt consists of two main components: External debt — borrowed from foreign lenders including multilateral institutions, bilateral partners, and commercial creditors — and Domestic debt — borrowed within Tanzania from local banks, pension funds, and investors through government securities.
USD 51,079.8M
≈ TZS 132.8 Trillion
+0.1%
From December 2025
~TZS 2,600
Per 1 USD
~40.7%
Threshold: 55%
📋 Tanzania External Debt Overview — January 2026
Indicator
Amount (USD Million)
Approx. TZS Trillion
Status
Total External Debt Committed
40,781.1
106.0
Committed
Disbursed Outstanding Debt (DOD)
35,750.7
93.0
Active / In Use
Undisbursed Debt
5,554.4
14.4
Pipeline
Total National Debt
51,079.8
132.8
Combined
🔎 Key Interpretation
Disbursed debt represents loans already received and actively deployed by the government. Undisbursed debt refers to loans that have been committed by lenders but not yet released — these are funds in the pipeline for future projects. January 2026 saw new disbursements of USD 122.9 million, primarily to the government, with service payments of USD 98.5 million.
Source: Bank of Tanzania Monthly Economic Review, January 2026. Exchange rate: ~TZS 2,600 per USD.
Tanzania National Debt Composition — January 2026
Distribution of external vs. domestic debt (% share of total)
External Debt: 70%
USD 35,750.7M (DOD) — owed to multilateral, bilateral, and commercial creditors abroad.
Domestic Debt: 30%
~USD 15,329.4M (TZS 38.6T) — held by commercial banks, pension funds, and other local investors.
Source: Bank of Tanzania, January 2026 Report.
Section 2
External Debt Stock by Creditor Category
Tanzania's external debt is owed to a range of creditors: multilateral development institutions, bilateral government partners, international commercial lenders, and export credit agencies. This creditor mix shapes the cost, risk, and repayment structure of the country's debt.
🌎 External Debt by Creditor — January 2026 (DOD)
Creditor Category
USD Million
Share (%)
Approx. TZS Trillion
Risk Profile
Multilateral Institutions World Bank, AfDB, IMF
20,803.5
58.2%
54.1
Low
Commercial Creditors Private / Market Lenders
12,702.7
35.5%
33.0
Medium–High
Bilateral Creditors Government-to-Government
1,526.9
4.3%
4.0
Medium
Export Credit Agencies
717.6
2.0%
1.9
Low–Medium
Total External DOD
35,750.7
100%
93.0
—
Source: Bank of Tanzania, January 2026 External Debt Report.
Creditor Breakdown — External Debt (USD Million)
Bar chart showing absolute debt held by each creditor category
📈 Share of External Debt by Creditor Type
🌟 Why Multilateral Dominance Matters
Multilateral loans (58.2% of external debt) from the World Bank, African Development Bank, and IMF typically carry longer repayment periods and lower interest rates than commercial borrowing. This structure provides Tanzania with a more stable debt foundation compared to markets that rely heavily on commercial creditors. However, the 35.5% commercial share is a factor requiring active monitoring.
Use of External Debt Funds
The disbursed external debt funds various sectors of Tanzania's economy:
External Debt Allocation by Sector (% of DOD)
Key sectors financed by Tanzania's external borrowing
Sector
Share of DOD (%)
Key Projects
Balance of Payments / Budget Support
22.7%
General budget financing
Transport & Telecommunications
21.8%
SGR, Roads, Airports, Port Expansion
Social Sectors / Education
19.4%
Schools, Health, Water
Energy & Mining
11.9%
Hydropower, Julius Nyerere Dam
Other Sectors
24.2%
Agriculture, Industry, Finance
Total
100%
—
Source: Bank of Tanzania sector allocation data, January 2026.
Section 3
Domestic Debt Overview
Domestic debt refers to government borrowing from local financial institutions and investors within Tanzania. The government raises domestic debt primarily through Treasury Bills (T-Bills), Treasury Bonds, and other government securities — auctioned by the Bank of Tanzania on behalf of the Ministry of Finance.
As of January 2026, domestic debt grew to TZS 38,599.6 billion — a 1.9% monthly increase, primarily driven by new government securities issuances. The securities market remains robust, with bond auctions oversubscribed by as much as 34% for 10-year bonds at a yield of 11.30%.
TZS 38,599.6B
January 2026
+1.9%
From Dec 2025
TZS 263.7B
Mobilized in January 2026
11.30%
Auction oversubscribed by 34%
🏠 Government Domestic Debt by Holder — January 2026
Creditor / Holder
Amount (TZS Billion)
Share (%)
Role in Economy
Commercial Banks
10,902.5
28.5%
Primary market participants; use bonds for liquidity management
Pension Funds
10,389.5
27.1%
NSSF, PPF — long-term savings matched to long-term bonds
Bank of Tanzania
7,436.0
19.4%
Monetary policy; BoT holds non-securitized debt
Other Investors
7,128.9
18.6%
Corporates, SACCOs, individual retail investors
Insurance Companies
2,005.0
5.2%
Regulatory requirement to hold government securities
Total Domestic Debt
38,599.6
100%
—
Source: Bank of Tanzania Domestic Debt Statistics, January 2026.
Domestic Debt Holders — Distribution
By holder type (TZS Billion)
Domestic Debt by Instrument
Bonds dominate at 80.4% of domestic portfolio
Domestic Debt Instruments
Instrument
Amount (TZS Billion)
Share (%)
Typical Tenor
Treasury Bonds
31,015.1
80.4%
2 – 25 Years
Treasury Bills (T-Bills)
1,821.4
4.7%
91, 182, 364 Days
Non-Securitized Debt
5,763.1
14.9%
Various
Total
38,599.6
100%
—
Source: Bank of Tanzania, January 2026.
✅
Strong Domestic Market Signal: The oversubscription of bond auctions (34% for 10-year bonds) indicates strong investor confidence in Tanzania's government securities. This depth in the domestic market reduces dependence on external borrowing and provides a stable, lower-cost financing channel — a positive indicator for debt management.
Section 4
Trend of Tanzania External Debt (2025–2026)
Tanzania's external debt has followed a generally increasing trajectory over recent years, driven by financing of large-scale national infrastructure projects. However, the January 2026 data reveals that the actual disbursed outstanding debt (DOD) reflects a more measured pace of increase compared to committed debt.
📈 External Debt Trend — 2025 to January 2026
Disbursed Outstanding Debt (DOD) in USD Billion with trend line overlay
🕑 External Debt Historical Data Points
Period
External DOD (USD Billion)
Approx. TZS Trillion
Monthly Change (%)
January 2025
36.6
95.2
Baseline
December 2025
35.3
91.8
▼ −3.6% (YTD to Dec)
January 2026
35.8
93.0
▲ +0.6%
🔎
Note on Committed vs. Disbursed Debt: The committed external debt figure of USD 40,781.1 million (as per the primary BoT document) is higher than the disbursed outstanding debt of USD 35,750.7 million. The difference — USD 5,554.4 million (TZS 14.4 trillion) — represents funds in the pipeline that have been approved but not yet drawn down by Tanzania.
Source: Bank of Tanzania Monthly Reports, January 2025 – January 2026.
Key Drivers of Debt Increase
External borrowing has been primarily directed toward major strategic national investments:
🚃 Transport Infrastructure
The Standard Gauge Railway (SGR) remains the largest single debt-financed project, alongside road construction, airport upgrades, and expansion of the Dar es Salaam Port — collectively representing 21.8% of external debt use.
⚡ Energy & Power
The Julius Nyerere Hydropower Project (2,115 MW) and other energy infrastructure projects account for 11.9% of external debt, supporting Tanzania's goal of affordable energy access and industrial growth.
🏫 Social Sectors
Education, health, and water and sanitation projects represent 19.4% of external debt use, reflecting Tanzania's commitment to human capital development alongside physical infrastructure.
📈 Budget Support
22.7% of disbursed external debt goes toward balance of payments and direct budget support — helping stabilise government finances during periods of fiscal stress or commodity price fluctuations.
Section 5
Composition of Tanzania's Total National Debt
Combining external and domestic debt, Tanzania's total national debt as of January 2026 stands at USD 51,079.8 million (TZS 132.8 trillion). The composition reveals a strong external weighting, which shapes both the country's development financing strategy and its exposure to global financial conditions.
Total National Debt Composition — USD & TZS (January 2026)
Side-by-side comparison of external vs. domestic debt in both currencies
📋 Tanzania National Debt Composition — Full Breakdown
Debt Type
USD Million
TZS Trillion
Share (%)
Primary Holders
External Debt (DOD)
35,750.7
93.0
70.0%
World Bank, AfDB, Commercial Banks
Domestic Debt
~15,329.4
39.9
30.0%
Commercial Banks, Pension Funds, BoT
Total National Debt
51,079.8
132.8
100%
—
Source: Bank of Tanzania, January 2026. Domestic USD figure inferred from TZS 39.9T at ~TZS 2,600/USD.
🌎 External Debt Deep Dive
External debt at USD 35.75 billion represents 70% of the national total. Key characteristics:
Committed: USD 40,781.1M (includes pipeline)
Disbursed: USD 35,750.7M (active)
Largest creditor: Multilateral (58.2%)
Jan 2026 disbursements: +USD 122.9M
Jan 2026 servicing: −USD 98.5M
Net Jan change: +USD 524M (+0.6%)
🏠 Domestic Debt Deep Dive
Domestic debt at TZS 38,599.6 billion (30%) has grown through strong securities issuance:
Treasury Bonds: TZS 31,015.1B (80.4%)
Treasury Bills: TZS 1,821.4B (4.7%)
Non-securitized: TZS 5,763.1B (14.9%)
Monthly growth: +1.9%
Jan servicing: TZS 669.8B
Bonds oversubscribed by 34%
🔎
Structural Observation: While external debt dominates (70%), the growing domestic debt market — backed by oversubscribed bond auctions and strong institutional investor participation — is a positive sign of Tanzania's deepening capital markets. A gradual rebalancing toward domestic sources could reduce FX exposure over time.
Batch 1 of 2 — Sections 1–5. Sections 6–8 (Debt Sustainability, Economic Implications, Summary) will be added in Batch 2.
Section 6
Key Indicators of Debt Sustainability
Debt sustainability assesses whether Tanzania can meet its current and future debt obligations without compromising economic stability or requiring exceptional adjustment measures. The internationally recognised framework — the IMF/World Bank Debt Sustainability Analysis (DSA) — benchmarks Tanzania's debt against key thresholds.
As of January 2026, Tanzania's debt indicators remain within sustainable bounds, though the upward trend in external debt warrants continued fiscal discipline.
PV Debt-to-GDP Ratio
40.7%
Threshold: 55%
✅ Within safe limit
Public Debt-to-GDP
~43%
Threshold: 55%
✅ Moderate & manageable
External Debt Share
70%
Target: <60% preferred
⚠️ Elevated — monitor FX risk
Multilateral Debt Share
58.2%
Higher = more concessional
✅ Favourable terms
Debt Service / Exports
~12%
Threshold: ~25%
⚠️ Rising — needs monitoring
Commercial Debt Share
35.5%
Higher = more market risk
⚠️ Watch global rate movements
📈 Tanzania Debt Sustainability Indicators vs. Thresholds
Actual levels compared to IMF/World Bank benchmark thresholds (% scale)
📋 Debt Sustainability Indicator Summary
Indicator
Tanzania (Jan 2026)
IMF/WB Threshold
Status
Trend
PV Debt-to-GDP
~40.7%
55%
✅ Safe
▲ Rising
Public Debt-to-GDP
~43%
55%
✅ Safe
▲ Rising
External Debt Share of Total
70%
<60% preferred
⚠️ Watch
▬ Stable
Multilateral Debt Share
58.2%
Higher = better
✅ Good
▬ Stable
Commercial Debt Share
35.5%
<30% preferred
⚠️ Elevated
▲ Rising
Debt Service / Exports
~12%
25% threshold
✅ Safe
▲ Rising
Shilling Depreciation (Jan)
0.97%
Mild
⚡ Monitor
▲ Gradual
Source: IMF DSA Framework; Bank of Tanzania January 2026 Report.
🎯 Overall Sustainability Assessment
Tanzania's debt profile remains sustainable — the PV Debt-to-GDP ratio of ~40.7% is well below the 55% IMF threshold, and the strong multilateral creditor composition (58.2%) provides concessional terms. However, the rising commercial debt share (35.5%) and FX exposure from a 70% external debt weighting require active monitoring and prudent fiscal management going forward. A 10% depreciation of the Tanzanian Shilling would add approximately TZS 9 trillion to the effective debt burden.
Debt Servicing — January 2026
Tanzania made the following debt service payments in January 2026:
External Debt Service
USD 98.5M
Principal + interest to foreign creditors
Domestic Debt Service
TZS 669.8B
Redemptions + coupons on government securities
Debt Service vs. New Disbursements — January 2026
Net flow: new borrowings vs. repayments (USD Million equivalent)
Section 7
Economic Implications of Tanzania's National Debt
Tanzania's national debt finances approximately 34% of the FY 2025/26 government budget (total: TZS 49.2 trillion). It underpins the country's Vision 2050 industrialisation agenda and supports a GDP growth target of 6.0–6.3% in 2026. The securities market plays an increasingly important role in managing debt risks and mobilising domestic savings.
✅ Positive Impacts
Finances SGR, roads, hydropower — adding 1.0–1.5% to GDP annually
Infrastructure drives FDI target of USD 15 billion
Projects created 160,000 jobs in 2025
Supports GDP growth of 6.5–6.9% in medium term
Strong securities market mobilised TZS 263.7B in January alone
Multilateral terms (58.2%) support stability — inflation at 3.2%, credit growth at 23.5%.
Commercial debt (35.5%) creates risk if global interest rates spike, slowing diversification.
Bond yields benchmark private sector rates, enhancing financial inclusion for SMEs and households.
Inclusive Growth
Infrastructure projects created 160,000 jobs in 2025; target unemployment below 13.4% and poverty below 20% by 2030.
Debt overhang could deter private investment amid global shocks, widening inequality gaps.
Securities market recycles domestic savings into growth projects, projecting resilient 6.3% GDP in 2026.
Source: Bank of Tanzania; Ministry of Finance FY2025/26 Budget; TICGL Research synthesis.
📈 Tanzania GDP Growth Rate — Actual & Projected (2022–2027)
Debt-financed infrastructure contributing to sustained growth above 6%
Section 8
Summary of Tanzania National Debt — January 2026
The following table consolidates all key national debt indicators from the Bank of Tanzania's January 2026 data, providing a single reference snapshot of Tanzania's debt position.
Indicator
Value
Currency / Unit
Notes
Total National Debt
USD 51,079.8M
TZS 132.8 Trillion
External + Domestic combined
Total External Debt (Committed)
USD 40,781.1M
TZS 106.0 Trillion
Includes undisbursed pipeline
Disbursed Outstanding Debt (DOD)
USD 35,750.7M
TZS 93.0 Trillion
Active / deployed debt
Undisbursed External Debt
USD 5,554.4M
TZS 14.4 Trillion
Committed but not yet drawn
Domestic Debt
~USD 15,329.4M
TZS 38,599.6 Billion
Up 1.9% month-on-month
External Debt Share
70.0%
% of Total
Down from 77% (attached doc baseline)
Domestic Debt Share
30.0%
% of Total
Growing via bond issuances
Largest External Creditor
Multilateral Institutions
USD 20,803.5M (58.2%)
World Bank, AfDB, IMF
Commercial Creditors
USD 12,702.7M
35.5% of external
Market-rate borrowing; highest risk tier
Bilateral Creditors
USD 1,526.9M
4.3% of external
Government-to-government loans
Export Credit Agencies
USD 717.6M
2.0% of external
Trade-linked financing
Domestic Debt — Treasury Bonds
TZS 31,015.1B
80.4% of domestic
Dominant instrument; 2–25 year tenors
Domestic Debt — T-Bills
TZS 1,821.4B
4.7% of domestic
91, 182, 364-day instruments
Largest Domestic Holder
Commercial Banks
TZS 10,902.5B (28.5%)
Followed by Pension Funds 27.1%
Public Debt-to-GDP
~43%
% of GDP
Below 55% IMF threshold
PV Debt-to-GDP (DSA)
~40.7%
% of GDP
Safe — threshold is 55%
External Debt Service (Jan 2026)
USD 98.5M
Monthly
Principal + interest payments
Domestic Debt Service (Jan 2026)
TZS 669.8B
Monthly
Redemptions + coupon payments
New External Disbursements (Jan)
USD 122.9M
Monthly inflow
Mostly to central government
Securities Mobilised (Jan 2026)
TZS 263.7B
Monthly
10-year bonds oversubscribed by 34%
Exchange Rate Applied
~TZS 2,600/USD
Conversion basis
Shilling depreciated 0.97% in January
GDP Growth Target (2026)
6.0 – 6.3%
% annual
Supported by debt-financed infrastructure
Source: Bank of Tanzania Monthly Economic Review, January 2026; Ministry of Finance; TICGL Research Division.
📈 Tanzania Debt Structure at a Glance — January 2026
All major debt components visualised on a single stacked chart (TZS Trillion)
✅ Conclusion
Data from the Bank of Tanzania report confirms that Tanzania's national debt has grown steadily, reaching USD 51,079.8 million (TZS 132.8 trillion) as of January 2026 — primarily driven by large-scale investments in infrastructure and economic transformation under Vision 2050.
Key features of Tanzania's debt profile include:
External debt dominates at 70% — reflecting reliance on foreign financing for major projects such as the SGR, Julius Nyerere Hydropower, and port expansion.
Multilateral lenders are the largest creditors (58.2%) — providing concessional terms that support long-term sustainability.
Domestic debt is growing rapidly — driven by oversubscribed bond auctions, with TZS 263.7 billion mobilised in January 2026 alone.
Debt remains sustainable — PV Debt-to-GDP at ~40.7% is comfortably below the 55% IMF threshold.
FX risk is real but contained — mild Shilling depreciation (0.97% in January) and careful monetary policy support stability.
Growth trajectory is positive — debt-financed infrastructure supports a 6.0–6.3% GDP growth target for 2026, with medium-term potential of 6.5–6.9%.
Despite the growth in public debt, Tanzania continues to maintain moderate and sustainable debt levels relative to GDP. The deepening domestic securities market — evidenced by oversubscribed auctions and growing institutional investor participation — positions Tanzania for increasingly self-reliant development financing. Prudent fiscal management, however, remains essential to preserving this trajectory.
In June 2025, Tanzania’s national debt reached TZS 116.6 trillion (USD 45.4 billion), a 13.5% increase from TZS 102.8 trillion in June 2024, driven by external borrowing (70.7% of total, TZS 82.4 trillion) for infrastructure and fiscal deficits. The Tanzania Shilling (TZS) depreciated by 9.6% year-on-year against the USD (2,569.46 TZS/USD), raising external debt servicing costs (USD 1–2 billion annually), despite robust reserves of USD 5,307.7 million (4.3 months of import cover). Supported by tourism receipts (USD 7,104 million) and a moderate debt-to-GDP ratio (~44.3%), Tanzania’s debt and TZS remain sustainable in the short term, but import reliance and USD exposure (67.6% of external debt) pose long-term challenges.
Tanzania National Debt Overview (June 2025)
Tanzania’s national debt encompasses public debt (domestic and external) and private sector external debt, critical for assessing fiscal sustainability. The attached document and provided data offer insights into debt stock, composition, and servicing, which are analyzed below.
Total National Debt:
Value: TZS 116.6 trillion (USD 45.4 billion at 2,569.46 TZS/USD).
Annual Increase: +13.5% from TZS 102.8 trillion (USD 43.8 billion at 2,345.38 TZS/USD) in June 2024.
Context: The document notes the national debt stock at USD 45,586.6 million (~TZS 117.1 trillion) in June 2025, aligning closely with the provided TZS 116.6 trillion. The 13.5% increase reflects increased borrowing for infrastructure (e.g., Standard Gauge Railway, Julius Nyerere Hydropower Plant) and fiscal deficits (2.5% of GDP in 2024/25). Earlier data shows USD 48,479.9 million in April 2025 and USD 48,217.0 million in February 2025, suggesting a slight decline by June due to repayments or exchange rate effects.
Debt-to-GDP Ratio: Estimated at ~44.3% based on a GDP of ~USD 102.6 billion (2022 GDP of USD 105.1 billion, adjusted for 5.6% growth in 2024 and 6% in 2025). The IMF’s 2024 Debt Sustainability Analysis (DSA) reports a public debt-to-GDP ratio of 35%, below the 55% benchmark for low-income countries, indicating moderate distress risk. However, World Economics estimates a higher GDP (~USD 155.5 billion), implying a lower ratio of ~29.2%, highlighting data variability.
Implications: The 13.5% debt increase supports growth-enhancing projects but raises servicing costs (~40% of government expenditures, per IMF). The moderate debt-to-GDP ratio suggests sustainability, but TZS depreciation (9.6% against USD) increases external debt burdens.
Domestic Debt:
Stock: TZS 35.5 trillion (USD ~13.8 billion, 29.3% of total debt).
Annual Increase: +11.1% from TZS 32.0 trillion in June 2024.
Monthly Increase: +0.9% from May 2025 (~TZS 35.2 trillion, based on April 2025’s TZS 34,759.9 billion).
By Instrument:
Instrument
TZS Trillion
% Share
Treasury Bonds (long-term)
29.5
83.2%
Treasury Bills (short-term)
6.0
16.8%
Total
35.5
100%
By Creditor:
Creditor
TZS Trillion
% Share
Commercial Banks
10.2
28.6%
Pension Funds
9.3
26.1%
Bank of Tanzania
7.2
20.2%
Others (incl. individuals, corporates)
6.4
18.1%
Insurance Companies
1.8
5.2%
BoT Special Funds
0.6
1.8%
Total
35.5
100%
Context: The document confirms TZS 85.9 billion raised via bonds in June 2025, with TZS 93.96 billion spent on debt service (TZS 60.13 billion principal, TZS 33.83 billion interest, correcting the document’s typo of TZS 276.8 billion). The 11.1% annual growth reflects financing of fiscal deficits (e.g., TZS 270.2 billion in May 2025 for Mainland Tanzania). Treasury bonds’ 83.2% share aligns with a shift to long-term instruments, reducing refinancing risks.
Implications: The diversified creditor base (28.6% banks, 26.1% pension funds) and long-term bond dominance enhance stability, but high borrowing rates (15.5% lending rates) crowd out private sector credit, which weakened in Q4 2024. The document’s note on retail investor participation via TIPS (18.1% “Others”) supports financial inclusion.
External Debt:
Stock: TZS 82.4 trillion (USD 33.0 billion, 70.7% of total debt).
Annual Increase: +14.8% from TZS 71.8 trillion (USD 30.6 billion) in June 2024.
By Borrower:
Borrower
TZS Trillion
% Share
Central Government
70.3
85.4%
Private Sector
12.1
14.6%
Public Corporations
≈ 0
Negligible
Total
82.4
100%
By Use of Funds:
Sector
% Share
Transport & Telecommunication
25.4%
Social Welfare & Education
21.3%
Energy & Mining
16.4%
Budget Support
15.2%
Agriculture
6.5%
Finance & Insurance
5.1%
Industry
4.0%
Others
6.1%
By Currency:
Currency
% Share
USD
67.6%
EUR
17.2%
JPY
4.9%
CNY
3.4%
SDR
3.0%
Others
3.9%
Context: The document’s tables (e.g., Table 2.2, 2.3, 2.4) confirm the external debt stock and composition, with USD 109.9 million disbursed in April 2025 for projects like SGR and TAZARA Railway (25.4% transport). The 14.8% increase reflects concessional loans (e.g., IMF’s USD 441 million ECF/RSF, World Bank’s USD 527 million) and non-concessional borrowing (34% of external debt). The 67.6% USD share amplifies risks from the 9.6% TZS depreciation.
Implications: The central government’s 85.4% share aligns debt with development priorities (e.g., Vision 2050), but low industry (4%) and agriculture (6.5%) allocations limit structural transformation. High USD exposure increases servicing costs (USD 80.9 million in April 2025), with external debt service at ~2.89% of GNI in 2023.
Debt Servicing:
Domestic: TZS 93.96 billion in June 2025 (TZS 60.13 billion principal, TZS 33.83 billion interest), per the document. Annual servicing was TZS 890.9 billion in February 2025 (TZS 609.9 billion principal, TZS 281 billion interest).
External: USD 80.9 million in April 2025, with annual estimates of USD 1–2 billion, driven by USD-denominated debt (67.6%) and TZS depreciation.
Context: Servicing absorbs ~40% of government expenditures, per IMF, straining fiscal space. Concessional loans (e.g., World Bank, 48% of external debt) mitigate costs, but non-concessional borrowing raises concerns.
Implications: High servicing costs limit development spending (33.7% of Zanzibar’s budget), necessitating revenue mobilization (TZS 2,689.2 billion in May 2025, 3.1% above target) and export growth.
Tanzania Shilling (TZS) Sustainability
The TZS’s sustainability is assessed through its exchange rate stability, depreciation trends, and impact on debt servicing, drawing from the provided data and document’s external sector insights (e.g., Charts 2.7.1–2.7.3, Table 2.7.1).
Exchange Rate Performance:
USD/TZS (IFEM):
June 2024: 2,345.38
May 2025: 2,565.08
June 2025: 2,569.46
Annual Depreciation: -9.6%
Monthly Change: -0.2% (May to June 2025)
Bureau de Change:
Buying Rate: 2,574.33 TZS/USD
Selling Rate: 2,582.67 TZS/USD
Other Currencies:
Currency
TZS per Unit (June 2025)
% Change (Y-o-Y)
EUR
2,763.91
-10.4%
GBP
3,248.65
-9.7%
JPY (100 units)
1,617.18
-10.3%
CNY
353.77
-10.2%
Context: The document notes improved IFEM liquidity in June 2025, driven by seasonal cash crop exports (e.g., cashew nuts, tobacco) and gold exports (USD 3,369.7 million annually). The 9.6% depreciation aligns with earlier trends (9% in 2024, 8% in 2023), but a slight 0.28% appreciation in October 2024 and 2.6% by January 2025 indicate periods of stability. The BoT’s USD 7 million intervention in January 2025 and reserves of USD 5,307.7 million (4.3 months of import cover) support orderly markets.
Drivers:
Import Demand: Goods imports rose to USD 459.5 million in Zanzibar and USD 13,040.7 million for Tanzania (Table A7), driven by capital goods (e.g., SGR, hydropower).
Export Shortfalls: Zanzibar’s exports fell to USD 150.3 million (-11.9%), with cloves down 27.2%. Tanzania’s goods exports grew to USD 1,036 million (Table 2.7.1), led by gold and cereals (USD 501.3 million), but were insufficient to offset imports.
Global USD Strength: U.S. monetary tightening increased USD demand, impacting emerging market currencies like the TZS.
Implications: The 9.6% depreciation raises import and debt servicing costs, contributing to inflation (3.4% in Zanzibar, 3.2% in Mainland). The narrow Bureau spread (0.3%) and low dollarization (3.2% of Mainland businesses use USD) indicate market confidence, but sustained depreciation pressures reserves.
Forex Market Activity:
IFEM Volume: USD 65.4 million in June 2025, +12.6% from USD 58.1 million in May 2025 (document, Page 10). This reflects trade settlements and seasonal imports, compared to USD 95.7 million in December 2024.
Reserves: USD 5,307.7 million (Chart 2.7.1), covering 4.3 months of imports, down slightly from USD 5,323.6 million in January 2025 but sufficient per IMF’s 4-month threshold.
Implications: Increased IFEM activity signals robust demand, but reserves and BoT interventions (e.g., USD sales) ensure stability. Service receipts (USD 7,104 million, driven by tourism’s 10% arrival increase to 2,333,322) bolster forex inflows.
TZS Sustainability:
Stability: The TZS’s “orderly and market-driven” performance (document, Page 10) and minimal monthly depreciation (-0.2%) indicate short-term stability, supported by reserves and interventions.
Risks: The 9.6% annual depreciation and high USD debt exposure (67.6%) increase servicing costs, with external debt service at USD 1–2 billion annually. Import reliance (USD 13,040.7 million) and export volatility (e.g., cloves) strain reserves.
Mitigating Factors: Tourism receipts (USD 7,104 million), FDI (USD 3.7 billion), and concessional financing (e.g., IMF’s USD 441 million) support forex inflows. The BoT’s 6% Central Bank Rate (Page 7) controls inflation (3%–5% target), stabilizing the TZS.
Implications: The TZS is sustainable in the short term, but long-term pressures from depreciation and import growth require export diversification (e.g., cereals, manufactured goods) and reserve accumulation.
~40% of government expenditures; USD 80.9 million in April 2025
USD/TZS Exchange Rate
2,569.46
-9.6% depreciation from June 2024; -0.2% from May 2025
Foreign Exchange Reserves
USD 5,307.7 million
4.3 months of import cover; supports TZS stability
Current Account Deficit
USD 2,117.6 million (est.)
Driven by goods imports (USD 13,040.7 million) vs. exports (USD 1,036 million)
Service Receipts
USD 7,104 million
+9.2% from USD 6,577 million; driven by tourism (2.3 million arrivals)
Key Insights and Policy Implications
Debt Sustainability:
Status: The TZS 116.6 trillion debt (44.3% of GDP) is sustainable per the IMF’s DSA (below 55% benchmark), with moderate distress risk. External debt’s 70.7% share and 14.8% growth support infrastructure (25.4% transport) but increase servicing costs (USD 1–2 billion annually).
Policy: Prioritize concessional financing (e.g., World Bank’s USD 527 million) and revenue mobilization (TZS 2,339.2 billion tax revenue in May 2025, 4.1% above target) to reduce non-concessional borrowing (34% of external debt).
TZS Sustainability:
Status: The 9.6% depreciation and stable monthly performance (-0.2%) indicate short-term TZS stability, supported by reserves (USD 5,307.7 million) and tourism receipts (USD 7,104 million). However, import reliance and USD debt exposure pose long-term risks.
Policy: Boost exports (e.g., cereals, USD 501.3 million; manufactured goods) via AfCFTA and diversify debt currencies to mitigate USD risks (67.6% share).
Debt-TZS Nexus:
Impact: TZS depreciation increases external debt servicing costs, with USD 22.3 billion (67.6%) in USD-denominated debt. This contributes to inflation (3.4% in Zanzibar) and fiscal pressure.
Policy: Strengthen reserves through FDI (USD 3.7 billion) and tourism (2.3 million arrivals) to stabilize the TZS and reduce servicing costs.
Economic Context:
Growth: 5.6% GDP growth in 2024 and 6% projected for 2025 support debt absorption, driven by tourism and infrastructure.
Risks: TZS depreciation, global USD strength, and export volatility (e.g., cloves -27.2%) threaten sustainability. Climate shocks and election uncertainties (October 2025) add risks.
Opportunities: Vision 2050, MKUMBI II reforms, and digital financial inclusion (TIPS, 453.7 million transactions) enhance fiscal and TZS resilience.
Critical Examination of the Establishment Narrative
Debt Optimism: The BoT and IMF emphasize sustainability (35% debt-to-GDP), but the 13.5% debt increase and 9.6% TZS depreciation raise servicing concerns, especially with USD debt (67.6%). The IMF’s moderate risk rating may understate long-term vulnerabilities if exports (e.g., cloves) or tourism falter.
TZS Stability: The BoT’s “orderly market” narrative (Page 10) is supported by reserves and interventions, but high import demand (USD 13,040.7 million) and global USD strength challenge long-term TZS sustainability. X posts on regional debt (e.g., Kenya’s unsustainable levels) suggest broader risks.
Crowding Out: The narrative overlooks domestic borrowing’s crowding-out effect (15.5% lending rates), limiting private sector credit (12.8% growth in January 2025) and Vision 2050’s private sector-led goals.
Between 2021/22 and 2025/26, Tanzania's debt service costs surged by 42–58%, from an estimated TZS 9–10 trillion to a confirmed TZS 14.22 trillion—now accounting for 25.2% of the national budget (TZS 56.49 trillion). Over this period, total public debt rose to approximately 46% of GDP, driven largely by external borrowing, which reached USD 33.9 billion in 2025/26 and remains 67.7% USD-denominated, exposing the country to exchange rate risks, especially following a 2.6% shilling depreciation in 2024/25. Domestic debt also expanded significantly to TZS 34.26 trillion, with the majority held by commercial banks and pension funds. Despite a stabilizing debt-to-GDP ratio and a manageable debt service-to-GNI ratio of 2.89% (2023), the growing reliance on non-concessional and foreign currency debt underscores fiscal vulnerabilities that require prudent debt management strategies to ensure long-term sustainability.
Escalating Service Costs
Tanzania's debt servicing landscape has undergone significant transformation over the past five years, reflecting the country's economic growth trajectory and evolving fiscal priorities. The most striking development is the substantial increase in debt service costs, which have risen from an estimated TZS 9-10 trillion in 2021/22 to TZS 14.22 trillion in 2025/26 – representing a 42-58% increase over the five-year period.
Key Performance Indicators at a Glance:
Current Debt Service (2025/26): TZS 14.22 trillion (25.2% of national budget)
Total Public Debt: Approximately 46% of GDP (2025/26)
The 2021/22 period established the baseline for Tanzania's modern debt management framework. With debt service costs estimated at TZS 9-10 trillion, the government maintained a relatively moderate debt burden at 43.6% of GDP. The debt composition showed a balanced approach with domestic debt at 15.9% of GDP and external debt forming the larger portion. Notably, domestic arrears stood at a manageable 1.8% of GDP, indicating effective short-term debt management.
The present value debt-to-GDP ratio of 31% remained well below the 55% benchmark, positioning Tanzania in the low-to-moderate debt distress risk category. External borrowing was predominantly concessional, reducing the overall cost burden and exchange rate exposure.
2022/23 Financial Year: Strategic Expansion
The government allocated TZS 9.1 trillion for debt servicing within a total budget of TZS 44.4 trillion, with TZS 7.4 trillion successfully disbursed by April 2023. This period marked a strategic shift as public debt increased to 45.7% of GDP (46.7% including domestic arrears), reflecting increased infrastructure investment.
External debt composition rose to 63.3% of total debt, indicating a pivot toward international financing for development projects. The shift toward non-concessional borrowing began during this period, driven by infrastructure financing needs. Despite this increase, the present value debt-to-GDP ratio remained sustainable at 31.8%.
2023/24 Financial Year: Acceleration Phase
Debt servicing allocation reached TZS 10.48 trillion, representing a 15% increase from the previous year. This increase occurred within a Ministry of Finance budget of TZS 15.94 trillion, highlighting debt service as a major fiscal priority. Total public debt climbed to 47.36% of GDP, with external debt reaching USD 30.533 billion by July 2023.
The debt structure showed concerning trends with external debt comprising 73% of total obligations, significantly increasing Tanzania's exposure to exchange rate fluctuations. Total national debt reached approximately TZS 69.44 trillion in 2022, continuing its upward trajectory through 2023.
2024/25 Financial Year: Consolidation Efforts
Debt service costs are estimated at TZS 11-12 trillion within a national budget of TZS 49.35 trillion. External debt peaked at USD 32.89 billion in September 2024, subsequently reaching USD 33.905 billion by January 2025. The central government held 78.1% of external debt, indicating concentrated fiscal responsibility.
Domestic debt stabilized at TZS 32.62 trillion in September 2024, with Treasury bonds dominating at 78.9% of domestic obligations. The debt-to-GDP ratio showed signs of stabilization, with projections indicating a gradual decline to 40.84% by 2029, suggesting improved debt sustainability measures.
2025/26 Financial Year: Current Trajectory
The current budget allocation confirms TZS 14.22 trillion for debt servicing, including TZS 6.49 trillion specifically for interest payments. This represents the highest debt service allocation in the five-year period, occurring within a total budget of TZS 56.49 trillion. External debt stands at USD 33.905 billion, with the government holding 76.4% of these obligations.
Domestic debt has grown to TZS 34.26 trillion as of March 2025, primarily held by commercial banks (29-33%) and pension funds (26.5-27.6%). The USD-dominated debt structure (67.7-68.1%) continues to pose exchange rate risks, particularly given the 2.6% depreciation of the Tanzanian Shilling in 2024/25.
Tanzania National Debt Service Costs (2021/22–2025/26)
Year
Debt Service Costs (TZS)
Total Budget (TZS)
Public Debt (% of GDP)
External Debt (USD)
Domestic Debt (TZS)
Notes
2021/22
9–10 trillion (estimated)
34.85–41.82 trillion (est.)
43.6%
28.51
22.17 trillion (est.)
Estimated based on 25–30% of expenditure (GDP: TZS 139.4 trillion); limited data on exact budget and external debt.
2022/23
9.1 trillion
44.4 trillion
45.7%
~30.533 billion
25.47 trillion (est.)
TZS 7.4 trillion paid by April 2023; domestic debt estimated as 36.7% of total debt (~TZS 69.44 trillion).
2023/24
10.48 trillion
44.39 trillion
47.36%
30.533 billion
32.62 trillion
15% increase in debt service costs; total budget reflects national budget, not just Ministry of Finance (TZS 15.94 trillion).
2024/25
11–12 trillion (estimated)
49.35 trillion
~46% (projected)
32.89–33.905 billion
32.62–34.26 trillion
Estimated based on 25–30% of revenue/expenditure, 10–15% increase from 2023/24; budget confirmed.
2025/26
14.22 trillion
56.49 trillion
~46% (projected)
33.905 billion
34.26 trillion
Debt service confirmed by Ministry of Finance (includes TZS 6.49 trillion interest); GDP estimated at TZS 165.9 trillion.
Key Observations
Trend in Debt Service Costs: Debt service costs have increased steadily, from an estimated TZS 9–10 trillion in 2021/22 to TZS 9.1 trillion in 2022/23, TZS 10.48 trillion in 2023/24, an estimated TZS 11–12 trillion in 2024/25, and a confirmed TZS 14.22 trillion in 2025/26. This reflects growing borrowing, particularly external debt (73% of total debt in 2024), and larger budgets (TZS 44.4 trillion in 2022/23 to TZS 56.49 trillion in 2025/26). The 18–29% jump from 2024/25 to 2025/26 is driven by increased interest payments (TZS 6.49 trillion in 2025/26) and a higher debt stock.
Debt Composition: External debt, predominantly USD-denominated (67.7–68.1%), reached USD 33.905 billion in 2025, exposing Tanzania to exchange rate risks, with a 2.6% shilling depreciation in 2024/25 increasing repayment costs. Domestic debt, mainly Treasury bonds (78.9% in 2024), rose from an estimated TZS 22.17 trillion in 2021/22 to TZS 34.26 trillion in 2025/26, held primarily by commercial banks (29–33%) and pension funds (26.5–27.6%).
Sustainability: Tanzania’s debt-to-GDP ratio increased from 43.6% in 2021/22 to 47.36% in 2023/24, stabilizing at ~46% in 2024/25–2025/26, with a projected decline to 40.84% by 2029. The debt service-to-GNI ratio was 2.8915% in 2023, indicating moderate debt distress risk per IMF and World Bank analyses. However, reliance on non-concessional borrowing and USD exposure poses challenges, particularly with shilling depreciation.
